DaVita (DVA) 8-K DAVITA 3rd QUARTER 2008 RESULTS

Exhibit 99.1

Contact:	LeAnne Zumwalt
	Investor Relations
	DaVita Inc.
	(650) 696-8910

DAVITA 3rd QUARTER 2008 RESULTS

El Segundo, California, November 3, 2008 – DaVita Inc. (NYSE: DVA) today announced results for the quarter ended September 30, 2008. Net income for the three and nine months ended September 30, 2008 was $93.9 million and $275.8 million, or $0.89 per share and $2.59 per share, respectively.

Net income for the three months ended September 30, 2007 was $89.3 million, or $0.83 per share excluding after-tax gains from insurance settlements and after-tax gains on the sale of investment securities, and was $94.5 million, or $0.88 per share including these items.

Net income for the nine months ended September 30, 2007 was $254.6 million, or $2.38 per share excluding after-tax gains from insurance settlements, after-tax gains on the sale of investment securities and the valuation gain on the Company’s alliance and product supply agreement with Gambro Renal Products, and was $296.1 million, or $2.76 per share including these items.

Financial and operating highlights include:

• Cash Flow: For the rolling 12 months ended September 30, 2008 operating cash flow was $595 million and free cash flow was $491 million. For the three months ended September 30, 2008 operating cash flow was $146 million and free cash flow was $119 million.

• Operating Income: Operating income for the three and nine months ended September 30, 2008 was $208 million and $610 million, respectively. Operating income for the three months ended September 30, 2007 was $206 million, excluding pre-tax gains from insurance settlements of $6.8 million. Operating income for the nine months ended September 30, 2007 was $605 million, excluding pre-tax gains from insurance settlements and the pre-tax valuation gain on the Company’s product supply agreement with Gambro Renal Products of $55 million.

• Volume: Total treatments for the third quarter of 2008 were 4,091,099, or 51,786 treatments per day, representing a per day increase of 5.1% over the third quarter of 2007. Non-acquired treatment growth in the quarter was 3.8% over the prior year’s third quarter.

• Effective Tax Rate: The effective tax rate was 39.8% and 38.9% for the three and nine months ended September 30, 2008, respectively. We are still projecting our 2008 annual effective tax rate to be in the range of 38.5%-39.5%, and are still projecting our 2009 effective tax rate to return to around 40.0%.

• Share Repurchases:During the first nine months of 2008, we repurchased a total of 3,461,353 shares of our common stock for $169.7 million, or an average price of $49.02 per share, pursuant to previously announced Board authorizations. We did not repurchase any shares of our common stock during the third quarter of 2008. However, during October 2008, we repurchased 1,027,502 shares of our common stock for $50 million, or an average price of $48.66 per share.

• Center Activity: As of September 30, 2008, we operated or provided administrative services at 1,425 outpatient dialysis centers serving approximately 111,000 patients, of which 1,402 centers are consolidated in our financial statements. During the third quarter of 2008, we acquired 6 centers, opened 22 new centers, merged 2 centers, closed 1 center, and divested 1 center.

Outlook

We expect our operating income results for 2008 to be near the middle of the range of our previously provided guidance of $800-$840 million. We still expect to generate approximately $480 million to $530 million of operating cash flow in 2008. Our operating income guidance for 2009 remains unchanged at a range of $820-$880 million. These projections and the underlying assumptions involve significant risks and uncertainties, including those described below and actual results may vary significantly from these current projections.

DaVita will be holding a conference call to discuss its results for the third quarter ended September 30, 2008 on November 3, 2008 at 12:00 p.m. Eastern Time. The dial in number is (800) 399-4406. A replay of the conference call will be available on DaVita’s official web page,www.davita.com, for the following 30 days.

This release contains forward-looking statements, including statements related to our 2008 and 2009 operating results and our 2009 expected effective tax rate. Factors which could impact future results include the uncertainties associated with governmental regulations, general economic and other market conditions, competition, accounting estimates and the risk factors set forth in the Company’s SEC filings, including its Form 10-Q for the quarter ended June 30, 2008. The forward-looking statements should be considered in light of these risks and uncertainties.

These risks and uncertainties include those relating to:

• the concentration of profits generated from commercial payor plans,

• continued downward pressure on average realized payment rates from commercial payors, which may result in the loss of revenue or patients,

• a reduction in the number of patients under higher-paying commercial plans,

• changes in government payment rates or the structure of payments under the Medicare ESRD Program may result in lower reimbursement for services we provide to Medicare patients and could have a material impact on our overall profitability,

• changes in pharmaceutical or anemia management practice patterns, payment policies, or pharmaceutical pricing,

• our ability to maintain contracts with physician medical directors,

• legal compliance risks, including our continued compliance with complex government regulations and compliance with the corporate integrity agreement applicable to the dialysis centers acquired from Gambro Healthcare and assumed in connection with such acquisition, and

• the resolution of ongoing investigations by various federal and state governmental agencies.

We undertake no obligation to update or revise any forward-looking statements, whether as a result of changes in underlying factors, new information, future events or otherwise.

This release contains non-GAAP financial measures. For reconciliations of these non-GAAP financial measures to their most comparable measure calculated and presented in accordance with GAAP, see the attached reconciliation schedules.

2

DAVITA INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(dollars in thousands, except per share data)

	Three months ended September 30,						Nine months ended September 30,
	2008			2007			2008			2007
Net operating revenues	$	1,447,135		$	1,318,381		$	4,199,163		$	3,909,282
Operating expenses and charges:
Patient care costs		1,005,648			890,243			2,909,143			2,662,841
General and administrative		128,617			120,596			374,581			356,249
Depreciation and amortization		54,970			49,230			160,673			142,078
Provision for uncollectible accounts		37,305			34,107			109,433			101,686
Minority interests and equity income, net		12,711			11,793			35,168			34,757
Valuation gain on alliance and product supply agreement		—			—			—			(55,275	)
Total operating expenses and charges		1,239,251			1,105,969			3,588,998			3,242,336
Operating income		207,884			212,412			610,165			666,946
Debt expense		(54,505	)		(62,715	)		(168,891	)		(194,496	)
Other income		2,481			6,278			10,331			17,131
Income before income taxes		155,860			155,975			451,605			489,581
Income tax expense		61,950			61,520			175,810			193,520
Net income	$	93,910		$	94,455		$	275,795		$	296,061
Earnings per share:
Basic earnings per share	$	0.90		$	0.89		$	2.61		$	2.80
Diluted earnings per share	$	0.89		$	0.88		$	2.59		$	2.76
Weighted average shares for earnings per share:
Basic		104,556,770			106,171,473			105,569,971			105,558,536
Diluted		105,577,823			107,561,139			106,421,184			107,129,135

3

DAVITA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(dollars in thousands)

	Nine months ended September 30,
	2008			2007
Cash flows from operating activities:
Net income	$	275,795		$	296,061
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		160,673			142,078
Valuation gain on alliance and product supply agreement		—			(55,275	)
Stock-based compensation expense		29,975			25,260
Tax benefits from stock award exercises		10,174			27,000
Excess tax benefits from stock award exercises		(5,054	)		(23,632	)
Deferred income taxes		56,157			25,645
Minority interests in income of consolidated subsidiaries		35,822			35,703
Distributions to minority interests		(43,391	)		(35,216	)
Equity investment income		(654	)		(946	)
Loss (gain) on disposal of assets		9,688			(4,944	)
Non-cash debt and non-cash rent charges		9,971			11,810
Changes in operating assets and liabilities, other than from acquisitions and divestitures:
Accounts receivable		(130,022	)		(32,425	)
Inventories		(1,248	)		15,144
Other receivables and other current assets		(28,684	)		(42,818	)
Other long-term assets		(12,761	)		(11,921	)
Accounts payable		(12,800	)		(6,458	)
Accrued compensation and benefits		(11,752	)		(17,347	)
Other current liabilities		29,838			(26,151	)
Income taxes		(3,129	)		(13,072	)
Other long-term liabilities		3,163			1,214
Net cash provided by operating activities		371,761			309,710
Cash flows from investing activities:
Additions of property and equipment, net		(223,851	)		(176,078	)
Acquisitions and purchases of other ownership interests		(101,166	)		(81,782	)
Proceeds from asset sales		451			4,643
Purchase of investments available for sale		(1,695	)		(21,363	)
Purchase of investments held-to-maturity		(19,005	)		(20,839	)
Proceeds from sale of investments available for sale		5,323			32,138
Proceeds from maturities of investments held-to-maturity		18,728			4,780
Contributions from minority owners		22,749			16,204
Purchase of intangible assets		(65	)		(556	)
Net cash used in investing activities		(298,531	)		(242,853	)
Cash flows from financing activities:
Borrowings		12,937,047			10,405,556
Payments on long-term debt		(12,938,297	)		(10,451,891	)
Deferred financing costs		(130	)		(4,462	)
Purchase of treasury stock		(169,673	)		(6,350	)
Excess tax benefits from stock award exercises		5,054			23,632
Stock award exercises and other share issuances, net		33,670			47,756
Net cash (used in) provided by financing activities		(132,329	)		14,241
Net (decrease) increase in cash and cash equivalents		(59,099	)		81,098
Cash and cash equivalents at beginning of period		447,046			310,202
Cash and cash equivalents at end of period	$	387,947		$	391,300

4

DAVITA INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

(dollars in thousands, except per share data)

ASSETS	September 30, 2008			December 31, 2007
Cash and cash equivalents	$	387,947		$	447,046
Short-term investments		51,614			40,278
Accounts receivable, less allowance of $204,594 and $195,953		1,056,691			927,949
Inventories		82,494			80,173
Other receivables		230,073			198,744
Other current assets		36,010			34,482
Deferred income taxes		219,160			247,578
Total current assets		2,063,989			1,976,250
Property and equipment, net		1,011,702			939,326
Amortizable intangibles, net		165,270			183,042
Investments in third-party dialysis businesses		19,239			19,446
Long-term investments		6,930			22,562
Other long-term assets		48,162			35,401
Goodwill		3,856,601			3,767,933
	$	7,171,893		$	6,943,960
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	212,661		$	225,461
Other liabilities		515,989			486,151
Accrued compensation and benefits		330,838			334,961
Current portion of long-term debt		64,262			23,431
Income taxes payable		—			16,492
Total current liabilities		1,123,750			1,086,496
Long-term debt		3,643,275			3,683,887
Other long-term liabilities		83,494			83,448
Alliance and product supply agreement, net		37,310			41,307
Deferred income taxes		214,477			166,055
Minority interests (fair value subject to potential put obligations—$296,000 and $330,000)		162,908			150,517
Commitments and contingencies
Shareholders’ equity:
Preferred stock ($0.001 par value, 5,000,000 shares authorized; none issued)
Common stock ($0.001 par value, 450,000,000 shares authorized; 134,862,283 shares issued; 104,787,536 and 107,130,127 shares outstanding)		135			135
Additional paid-in capital		755,579			707,080
Retained earnings		1,791,085			1,515,290
Treasury stock, at cost (30,074,747 and 27,732,156 shares)		(635,274	)		(487,744	)
Accumulated other comprehensive loss		(4,846	)		(2,511	)
Total shareholders’ equity		1,906,679			1,732,250
	$	7,171,893		$	6,943,960

5

DAVITA INC.

SUPPLEMENTAL FINANCIAL DATA

(unaudited)

(dollars in millions, except for per share and per treatment data)

	Three months ended									Nine months ended September 30, 2008
	September 30, 2008			June 30, 2008			September 30, 2007
Financial Results excluding gains from insurance settlements and gains on sale of investment securities for the three months ended September 30, 2007:
Net income(1)	$	93.9		$	95.0		$	89.3		$	275.8
Diluted earnings per share(1)	$	0.89		$	0.90		$	0.83		$	2.59
Operating income(1)	$	207.9		$	205.6		$	205.6		$	610.2
Operating income margin(1)		14.4	%		14.6	%		15.6	%		14.5	%
Business Metrics:
Volume
Treatments		4,091,099			4,018,763			3,842,763			12,044,639
Number of treatment days		79.0			78.0			78.0			234.4
Treatments per day		51,786			51,523			49,266			51,385
Per day year over year increase		5.1	%		6.0	%		6.1	%		5.8	%
Non-acquired growth year over year		3.8	%		4.5	%		5.2	%		4.4	%
Revenue
Total operating revenue	$	1,447		$	1,407		$	1,318		$	4,199
Dialysis and related lab services revenue per treatment	$	336.42		$	335.98		$	333.57		$	333.83
Per treatment increase (decrease) from previous quarter		0.1	%		2.1	%		(1.3	%)		—
Per treatment increase (decrease) from previous year		0.9	%		(0.6	%)		0.6	%		(0.8	%)
Expenses
A.        Patient care costs
Percent of revenue		69.5	%		69.2	%		67.5	%		69.3	%
Per treatment (including gains from insurance settlements of $1.76 for the third quarter of 2007)(2)	$	245.81		$	242.19		$	231.67		$	241.53
Per treatment increase (decrease) from previous quarter		1.5	%		2.4	%		(1.4	%)		—
Per treatment increase (decrease) from previous year		6.1	%		3.1	%		(0.8	%)		2.8	%
B.        General & administrative expenses
Percent of revenue		8.9	%		8.9	%		9.1	%		8.9	%
Per treatment	$	31.44		$	31.15		$	31.38		$	31.10
Per treatment increase (decrease) from previous quarter		0.9	%		1.5	%		(2.8	%)		—
Per treatment increase (decrease) from previous year		0.2	%		(3.5	%)		1.5	%		(1.0	%)
C.        Bad debt expense as a percent of current-period revenue		2.6	%		2.7	%		2.6	%		2.6	%
D.        Consolidated effective tax rate		39.8	%		38.0	%		39.4	%		38.9	%

(1) These are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their most comparable measure calculated and presented in accordance with GAAP, see attached reconciliation schedules.

(2) On a non-GAAP basis patient care costs per treatment excluding gains from insurance settlements of $1.76 for the third quarter of 2007 would have been $233.43.

6

DAVITA INC.

SUPPLEMENTAL FINANCIAL DATA—continued

(unaudited)

(dollars in millions, except for per share and per treatment data)

	Three months ended									Nine months ended September 30, 2008
	September 30, 2008			June 30, 2008			September 30, 2007
Cash Flow
Operating cash flow	$	146.2		$	134.5		$	95.8		$	371.8
Operating cash flow, last twelve months	$	595.1		$	544.6		$	499.8
Free cash flow (1)	$	119.0		$	114.4		$	73.5		$	306.6
Free cash flow, last twelve months (1)	$	491.2		$	445.7		$	395.6
Capital expenditures:
Development and relocations	$	51.6		$	60.2		$	48.5		$	158.0
Routine maintenance/IT other	$	27.2		$	20.2		$	22.6		$	65.9
Acquisition expenditures	$	31.5		$	60.9		$	75.5		$	101.2
Accounts Receivable
Net receivables	$	1,057		$	1,047		$	976
DSO		70			70			70
Debt/Capital Structure
Total debt (2)	$	3,704		$	3,705		$	3,701
Net debt, net of cash (2)	$	3,316		$	3,378		$	3,309
Leverage ratio (see Note 1)		2.98	x		3.07	x		3.10	x
Overall effective weighted average interest rate during the quarter		5.66	%		5.75	%		6.48	%
Overall effective weighted average interest rate end of the quarter		6.09	%		5.68	%		6.43	%
Effective weighted average interest rate on the Senior Secured Credit Facilities end of the quarter		5.39	%		4.59	%		6.00	%
Economically fixed interest rates as a percentage of our total debt		70	%		69	%		77	%
Share repurchases	$	—		$	137.2		$	—		$	169.7
Clinical (quarterly averages)
Dialysis adequacy -% of patients with Kt/V > 1.2		94	%		95	%		94	%
Patients with Hb>=10 <=13		87	%		86	%		80	%
Patients with arteriovenous fistulas placed		61	%		60	%		57	%

(1) These are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their most comparable measure calculated and presented in accordance with GAAP, see attached reconciliation schedules.

(2) Excludes an unamortized balance of a debt premium associated with our senior notes that is not actually outstanding debt principal.

7

DAVITA INC.

SUPPLEMENTAL FINANCIAL DATA—continued

(unaudited)

(dollars in thousands)

Note 1: Calculation of the Leverage Ratio

Under the Company’s current Senior Secured Credit Facilities (Credit Agreement), the leverage ratio is defined as all funded debt plus the face amount of all letters of credit issued, minus cash and cash equivalents, divided by “Consolidated EBITDA”. The leverage ratio determines the interest rate margin payable by the Company for its term loan A and revolving line of credit under the Credit Agreement by establishing the margin over the base interest rate (LIBOR) that is applicable. The following leverage ratio was calculated using “Consolidated EBITDA” as defined in the Credit Agreement. The calculation below is based on the last twelve months of “Consolidated EBITDA”, pro forma for the routine acquisitions that occurred during the period. The Company’s management believes that the presentation of “Consolidated EBITDA” is useful to investors to enhance their understanding of the Company’s leverage ratio under its Credit Agreement.

	Rolling 12-months ended September 30, 2008
Net income	$	361,512
Income taxes		228,034
Debt expense		231,542
Depreciation and amortization		212,065
Minority interests and equity income, net		45,896
Other		10,683
Stock-based compensation expense		38,865
“Consolidated EBITDA”	$	1,128,597
	September 30, 2008
Total debt, excluding debt premium of $3.9 million	$	3,703,599
Letters of credit issued		47,001
		3,750,600
Less: cash and cash equivalents		(387,947	)
Consolidated net debt	$	3,362,653
Last twelve months “Consolidated EBITDA”	$	1,128,597
Leverage ratio		2.98x

In accordance with the Company’s Credit Agreement, the Company’s leverage ratio cannot exceed 4.75 to 1.0 as of September 30, 2008. At that date, the Company’s leverage ratio did not exceed 4.75 to 1.0.

8

RECONCILIATIONS FOR NON-GAAP MEASURES

(unaudited)

(dollars in thousands)

1. Net income excluding gains from insurance settlements, gains on the sale of investment securities and the valuation gain on the alliance and product supply agreement (the Product Supply Agreement):

We believe that net income excluding gains from insurance settlements, gains on the sale of investment securities and the valuation gain on the Product Supply Agreement enhances a user’s understanding of our normal net income for these periods by providing a measure that is more meaningful because it excludes insurance settlement gains related to insurance proceeds from Hurricane Katrina and from a fire that destroyed one of our centers, as well as non-recurring gains on the sale of investment securities and a non-recurring non-cash item that resulted from the termination of our purchase obligation for dialysis machines from Gambro Renal Products Inc. under the Product Supply Agreement, and accordingly is more comparable to current and prior periods and indicative of consistent net income. This measure is not a measure of financial performance under United States generally accepted accounting principles and should not be considered as an alternative to net income.

	Three months ended							Nine months ended
	September 30, 2008		June 30, 2008		September 30, 2007			September 30, 2008		September 30, 2007
Net income	$	93,910	$	94,951	$	94,455		$	275,795	$	296,061
Less: Gains on insurance settlements		—		—		(6,779	)		—		(6,779	)
Gains on the sale of investment securities		—		—		(1,634	)		—		(5,868	)
Valuation gain		—		—		—			—		(55,275	)
Add: Related income tax		—		—		3,273			—		26,422
	$	93,910	$	94,951	$	89,315		$	275,795	$	254,561

2. Operating income excluding pre-tax gains from insurance settlements and the pre-tax valuation gain on the Product Supply Agreement:

We believe that operating income excluding gains from insurance settlements and the valuation gain on the Product Supply Agreement enhances a user’s understanding of our normal operating income for these periods by providing a measure that is more meaningful because it excludes insurance settlements gains related to insurance proceeds from Hurricane Katrina and from a fire that destroyed one of our centers and a non-recurring non-cash item that resulted from the termination of our purchase obligation for dialysis machines from Gambro Renal Products Inc. under the Product Supply Agreement and accordingly is more comparable to current and prior periods and indicative of consistent operating income items. This measure is not a measure of financial performance under United States generally accepted accounting principles and should not be considered as an alternative to operating income.

	Three months ended							Nine months ended
	September 30, 2008		June 30, 2008		September 30, 2007			September 30, 2008		September 30, 2007
Operating income	$	207,884	$	205,554	$	212,412		$	610,165	$	666,946
Less: Gains on insurance settlements		—		—		(6,779	)		—		(6,779	)
Valuation gain		—		—		—			—		(55,275	)
	$	207,884	$	205,554	$	205,633		$	610,165	$	604,892

9

RECONCILIATIONS FOR NON-GAAP MEASURES

(unaudited)

(dollars in thousands)

3. Free cash flow

Free cash flow represents net cash provided by operating activities less capital expenditures for routine maintenance and information technology. We believe free cash flow is a useful adjunct to cash flow from operating activities and other measurements under United States generally accepted accounting principles, since free cash flow is a meaningful measure of our ability to fund acquisition and development activities and meet our debt service requirements. Free cash flow is not a measure of financial performance under United States generally accepted accounting principles and should not be considered as an alternative to cash flows from operating, investing or financing activities, as an indicator of cash flows or as a measure of liquidity.

	Three months ended									Nine months ended September 30, 2008
	September 30, 2008			June 30, 2008			September 30, 2007
Cash provided by operating activities	$	146,227		$	134,510		$	95,778		$	371,761
Less: Expenditures for routine maintenance and information technology		(27,217	)		(20,153	)		(22,229	)		(65,197	)
Free cash flow	$	119,010		$	114,357		$	73,549		$	306,564

	Rolling 12-Month Period
	September 30, 2008			June 30, 2008			September 30, 2007
Cash provided by operating activities	$	595,087		$	544,638		$	499,818
Less: Expenditures for routine maintenance and information technology		(103,885	)		(98,897	)		(104,189	)
Free cash flow	$	491,202		$	445,741		$	395,629

10